“Borrowers need to understand whether a mortgage broker is genuinely independent, whether the broker is offering products from a narrow or broad range of lenders, and whether some lenders are ‘preferred’ by the broker,” the submission said.
COBA’s comments come after the Financial System Inquiry interim report requested further information on the way in which mortgage brokers direct borrowers to lenders and the broader competition issues of integration.
In its second submission COBA reiterates the oligopolistic behaviour of the major banks – as outlined in its first submission – that has led to a greater number of major bank-owned brokerages since the GFC.
“CBA’s takeover of Aussie Home Loans (AHL) means that one of the leading mortgage brokers in the market is subject to the interests of the largest lender in the market,” the submission said.
“Consolidation of the mortgage distribution services market in recent years includes NAB’s acquisition of the PLAN, Choice and FAST brokerages, trading under the Advantage brand name,” it said.
“Westpac owns the RAMS Home Loans network.
“CBA, in addition to its major stake in AHL, has a significant stake in Mortgage Choice through its ownership of Count Financial.”
Speaking to Mortgage Business, Aussie Home Loans executive director James Symond said CBA’s ownership of the brokerage is not out of step with industry trends as banks own a share in all major Australian brokerages.
“Whether you are AFG or Connective or the NAB channels, I don’t think there is a major broker in Australia without a bank on its register,” Mr Symond said.
“It’s not who is the majority or minority owner, it’s the actions of the group,” he says, adding that any suggestions that CBA’s ownership of the group has led to a greater proportion of CBA loans being written are unfounded.
While vertical integration has been widely reported in the financial advice space, vertically integrated broking is gaining greater attention as the Murray Inquiry rolls on.
A recent Mortgage Business poll of 193 readers found 79.8 per cent believe a conflict of interest is created by vertical integration, while 20.2 per cent said no conflict is created.